THIRD AMENDMENT TO THE THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF PLM EQUIPMENT GROWTH & INCOME FUND VII

                                 THIRD AMENDMENT
                                     TO THE
                           THIRD AMENDED AND RESTATED
                          LIMITED PARTNERSHIP AGREEMENT
                                       OF
                     PLM EQUIPMENT GROWTH & INCOME FUND VII


         This Third  Amendment  ("Amendment")  to the Third Amended and Restated
Limited  Partnership  Agreement  of PLM  Equipment  Growth  &  Income  Fund  VII
("Partnership")  is executed as of March 25, 1999, by its General  Partner,  PLM
Financial Services,  Inc., a Delaware corporation ("General Partner"),  pursuant
to Article XVIII of the Agreement (as defined below).  All capitalized terms not
otherwise defined herein shall have the meanings as set forth in the Agreement.

                                    RECITALS

         The  Partners  entered into a Third  Amended and  Restated  Partnership
Agreement  as of May 10,  1993,  a First  Amendment  to the  Third  Amended  and
Restated Limited Partnership  Agreement as of May 28, 1993, and a Second Amended
and Restated Limited Partnership Agreement as of January 21, 1994 (collectively,
the "Agreement").

         The  General  Partner  now amends the  Agreement,  pursuant  to Article
XVIII,  paragraph two,  subsections (1) and (2), to add to the General Partner's
representations,  duties or obligations for the benefit of the Limited Partners,
and to cure any  ambiguity  or to correct  any  inconsistency  that may exist in
Section 3.12 of the Agreement. In executing this Amendment,  the General Partner
represents,  warrants and agrees, and will take all action to ensure,  that this
Amendment does not, and will not, detrimentally affect the Cash Distributions of
the Limited  Partners or Assignees or the  management of the  Partnership by the
General Partner.

         Now, therefore, the Agreement is amended as follows:

1.       Section 3.12 is amended to read in its entirety as follows:

         "Special Allocation of Gross Income:

                  After making all other  allocations  required pursuant to this
         agreement,  Gross Income in each taxable year of the Partnership  shall
         be specially  allocated to the General Partner to the extent  necessary
         to cause the Investment  Account  balance of the General  Partner to be
         zero as of the close of such taxable year."

         IN  WITNESS  WHEREOF,  the  General  Partner  has  duly  executed  this
Amendment as of March 25, 1999

                                             PLM Financial Services, Inc.,
                                             A Delaware corporation,
                                             General Partner and as
                                             Attorney-in-fact for an on
                                             behalf of the Limited Partners

                                             By:  /s/ Xxxxxxx X. Xxxxxxxx
                                                  ------------------------
                                             Title:  President
                                                   --------------------
                                             Name: __________________